The U.S. Small Business Administration (SBA) opened a portal today for Paycheck Protection Program (PPP) borrowers of loans $150,000 or smaller to apply for loan forgiveness directly from the federal agency.
“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses — including many sole proprietors — who used funds from our Paycheck Protection Program loans to survive the pandemic,” administrator Isabel Casillas Guzman said in a press release. “The vast majority of businesses waiting for forgiveness have loans under $150,000.
“These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process,” she continued. “We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”
Almost 900 lending partners are participating in the SBA’s direct forgiveness portal, representing more than one-third of eligible $150,000 or smaller loans.
“The streamlined and efficient SBA PPP loan forgiveness portal will help borrowers and lenders move forward with economic growth and job creation following the pandemic,” Sam Sidhu, president and CEO of leading PPP lender Customers Bank, said in the release. “We encourage other lenders to join Customers Bank and opt-in to the SBA portal.”
More than 8.5 million small businesses have received nearly $800 billion through 11.7 million loans since the PPP was introduced in March 2020. Loans are calculated at 2.5 times each applicant’s average monthly payroll expenses. To qualify for loan forgiveness, borrowers were required to maintain employee and compensation levels and spend at least 60% of the loan on payroll expenses. Other qualifying expenses included rent and utility payments, mortgage interest, operating expenses, property damage costs, worker protection expenses and supplier costs.
In its early days, the program drew public ire for providing loans to large national chains. During the first round of PPP funding, which was exhausted in 13 days, the average loan size was $206,600. In 2021, the average loan size dropped to $42,000, and nearly all (96%) of loans were disbursed to businesses with fewer than 20 employees, compared with 87% last year.
By June 2020, more than 80% of craft breweries had received PPP loans, according to a survey conducted by the Brewers Association. The program was a lifeline for craft breweries who were forced to shutter their taprooms for onsite service and lost much of their distributed draft business when bars and restaurants closed.